Do you have a Flexible Spending Account (FSA)? If so, you likely have tax-free funds sitting in there, waiting for you to use them on qualifying medical expenses. Just one issue: if you don’t spend that money before December 31st, you lose it.
One option for spending that money? Candid. Although it’s not the cheapest clear aligner treatment out there, using an FSA can make the price a whole lot more manageable. If your FSA funds are burning a hole in your pocket (or the end of the year is coming up), Candid’s in-person care and intensive remote oversight might be worth dipping in. Here’s everything you need to know about using those sweet tax-free funds for your treatment.
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What Is a Flexible Spending Account (FSA)?
When you sign a contract with an employer, you might get a benefits package. This can include things like insurance, a 401k, sick days, and paid time off. In some cases, an FSA is part of the deal.
These employer-sponsored accounts hold pre-tax income, which you can then apply to qualifying medical expenses. This benefits you in two ways. First, you pay less in income taxes. Second, you have earmarked funds to help with things like prescriptions, therapies, and dental treatments before you meet your insurance deductible — plus items insurance doesn’t cover at all.
Before using your funds, just make sure your treatment or product qualifies, then pay using your debit card or cover the cost, then file for reimbursement. The limit on FSA deposits is $3,050 per year (as of January 1st, 2023) and the funds expire at the end of the day on December 31st. In limited circumstances, a small amount of money can roll over from year to year, but don’t count on this.
Depending on your circumstances, an FSA can be a great thing to have. People with routine medical expenses can easily make use of the money in the account while benefiting from a lower tax bill. For those who don’t have a chronic condition, adding funds can be a bit of a gamble and leave you scrambling at the end of the year to use them.
How To Get an FSA
While FSAs are a type of savings account, they don’t function like one you get from a bank. You don’t head to a bank branch or apply online. You just work with your HR department — assuming your company offers FSAs.
Usually, your FSA will be given to you as part of your benefits package when hired. If you weren’t given one, you should still ask HR about the possibility if one interests you; it might be a newer benefit.
So, what about the self-employed? Right now, FSAs just aren’t an option. Given how the gig economy is growing, this might change or it’s possible that an alternative account will be created to address this gap.
Do FSA Funds Cover Dental/Orthodontic Treatment?
On the surface, this seems like a straightforward question that should have a straightforward answer. If only FSAs were that simple.
The first thing to understand is how dental and orthodontic treatments are classified. They’re generally placed into one of four categories: preventative, basic, major, or cosmetic. While it isn’t true across the board — little is with FSAs — treatments that fall into the first three categories are considered qualifying medical expenses. Cosmetic treatments are not.
Need your six-month dental cleaning and check-up? Your FSA funds can be used for payment. The same is true for things like dentures, fillings, and gum disease treatment. But what about braces and aligners?
These orthodontic treatments fall into a gray area. Depending on the type and severity of misalignment you want to correct, they might be essential or just cosmetic. On top of this, FSA administrators have a lot of freedom to interpret things in their own way. This means there are no hard and fast rules you can follow. Instead, clarify with your administrator before using your funds to avoid penalties.
What Types of Treatment Can an FSA Cover?
The parameters for FSA coverage are set by the IRS and interpreted by your account administrator. According to their guidelines, you can use your FSA funds to pay for any dental procedure that either treats or prevents dental disease. Essentially, if the treatment benefits your oral health, it is typically an eligible expense.
Procedures that are considered cosmetic are not eligible expenses. This means teeth whitening, veneers, and other similar services are not covered.
Covered Dental Procedures
- Dental cleanings
- X-rays and scans
- Fillings
- Root canals
- Extractions
- Crowns
- Fluoride treatments
- Braces and clear aligners (in many cases)
- Dentures
- Sealants and bonding
This isn’t an exhaustive list, but it includes many of the procedures that people typically use their FSA funds to cover.
Can I Use My FSA for Candid Clear Aligners?
In many cases, yes. FSAs allow you to use funds for medically necessary treatments, and clear aligners usually benefit your overall oral health. On rare occasions, providers might consider minor orthodontic corrections cosmetic, but most of the time, clear aligner treatment is an eligible expense, so you should be able to use FSA funds to pay for Candid.
If you are uncertain where your personal case falls, discuss it with your dentist and get clarification from your FSA provider.
How To Use FSA Funds for Candid Treatment
There are a few ways to access your FSA funds. The exact method will depend on your administrator’s rules and procedures. Most will offer one or more of the following options:
- Debit Card: If your provider issues debit cards, you can use your FSA account like a checking account. Just keep in mind that the card only works at medical merchants.
- Online Bill Pay: Just like a traditional bank account, most FSAs use online banking. Using the administrator’s portal, you transfer money to your dentist’s account.
- Reimbursement: If you go this route, you’ll pay your dentist for your treatment out of pocket, then either you or your dentist’s office will submit a claim for reimbursement.
Most dentist offices are happy to let you use any of these FSA payment options, allowing you to choose whichever works best for you.
What If I Have Dental Insurance, Too?
Is it better to use dental insurance or an FSA to pay for your Candid treatment? If you have both, you can use both!
Your orthodontic benefits likely won’t cover your entire treatment cost; only up to 50%. And they sometimes include age limits and/or lifetime spending maximums. Let’s say your dental insurance covers 50% of your $3,500 Candid treatment. However, it also has a lifetime maximum of $1,500. In this case, you’d receive $1,500 of coverage from your insurance provider and you would need to pay the remaining $2,000 out of pocket.
If you have an FSA, you can use that to cover the remaining balance if you’d like. But that depends on your plans for future health care expenses. The annual limit for FSA contributions is $3,050, so if you plan on using it for other healthcare expenses later in the year, you might hold off. But if the year’s end is approaching, you’ll need to use it or lose it, so spend away on that Candid treatment.
The benefit of using dental insurance is that the provider will cover some of your costs. FSA funds are still your money, since they came out of your paycheck. But using both at the same time could help you save a lot on your home aligners.
Flexible Spending Accounts vs. Health Savings Accounts
FSAs and HSAs are two accounts that let you save tax-free money and use it for qualifying healthcare expenses. Despite their similar names and functions, they are not identical. Below are the key differences to keep in mind.
| FSA | HSA | |
|---|---|---|
| Who qualifies | Anyone whose employer offers them as a benefit | Only people with a qualifying high deductible health plan (HDHP) |
| 2023 contribution limit | $3,050 for an individual | $3,850 for an individual, $7,750 for a family |
| Contribution adjustments | Only during open or special enrollment periods | Anytime |
| Expiration | Dec. 31 every year | None, unused funds will roll over |
| Account ownership | Owned by the employer. You lose it if you change jobs. | Owned by the individual and follows you during employment changes. |
| Using funds | Might not have access to funds for non-medical expenses | Can withdraw funds for non-medical expenses, but must pay a 20% penalty |
Just like with FSAs, HSAs can be used to cover orthodontic treatment, including Candid. But this will depend on your account so check into the terms before trying to use your funds.
Final Thoughts
Flexible Spending Accounts are an ideal way to pay for your Candid treatment, especially if the end of the year is fast approaching. Your dentist’s office should be able to help you access your FSA funds to pay for your Candid treatment. Just be sure to check with your provider to make sure it’s eligible for FSA payments.
Frequently Asked Questions
Are FSAs voluntary?
In many cases, getting one isn’t exactly voluntary; your HR department just automatically creates the account for you as part of your benefits package. However, you get to choose how much money you want to contribute to the account each year — and $0 is an option.
Do employers contribute money to FSA accounts?
This is an option but not one all employers take. Some will contribute a set amount as part of the employment benefits, so even if you don’t add funds, you might have money in your account to use before expiration.
What are the biggest differences between HSAs and FSAs?
The two main differences between them are who the account is tied to and whether or not the funds roll over. FSA are tied to your employer, so you lose them when you leave a given company, while your HSA is yours as long as you have a high-deductible health plan. As for roll over, FSA funds expire while HSA funds carry over year to year.
If I have both an FSA and an HSA, which should I use?
Before using either, start with insurance benefits. Once you exhaust your benefits, use your FSA funds since they expire. Then, dip into your HSA to cover whatever expenses remain.
If I change jobs, do I lose my FSA funds?
If you completely leave your current employer, yes. However, if you change jobs within the same company, you likely will keep your FSA and access to the funds within.
How do FSA administrators determine if something is cosmetic or not?
They start with the guidelines provided by the IRS and then interpret things based on how they perceive a given treatment. In general, if a treatment can positively impact health, it is covered.
Why are in-office treatments more likely to be considered qualifying medical expenses?
They tend to have a positive impact on health while at-home treatments lean more cosmetic. While there are cosmetic in-office treatments and medical at-home ones, administrators paint with broad strokes.
Are FSA funds easy to use?
Yes, especially if your account has a debit card tied to it. Then you just use the card like any other. Filing for reimbursement is a little trickier but still pretty straightforward.
What happens if I use my funds for a non-qualifying expense?
Whatever money you use loses its tax-free status. You’ll need to pay taxes and might also get hit with a 20% penalty. Companies also have the option of charging fines on top of this.
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